Crude Oil Prices Rise Despite Market Turmoil, Gold Stuck In Place

Crude oil prices turned higher Friday after the IEA upgraded demand forecasts for 2018 and 2019 while saying that supply fears have abated. This is after the OPEC-led group of top producers scaled back coordinated output cuts. Traders seemed to interpret the news to mean that pressure to step up shipments further has receded.

Meanwhile, gold prices remained stuck in place as Turkey-inspired risk aversion sent the US Dollar higher even as safety-seeking capital flows buoyed Treasury bonds, sending yields downward. That put yellow metal’s appeal as an anti-fiat alternative directly in conflict with its role as benchmark non-interest-bearing asset. This translated into sideways drift on net, highlighting the folly of categorizing gold as a “haven”.

OIL EYES OPEC REPORT & US DRILLING DATA, GOLD MAY BOUNCE

From here, the OPEC Monthly Report will help gauge if the producer bloc and its allies are indeed satisfied enough with the recent output increase to take their foot off the accelerator. Later in the day, the EIA Drilling Productivity Report will add another piece to the supply/demand puzzle, offering clues about the possibility that a pickup in shipments from the US will flood global stockpiles again.

As for gold, it edged slightly lower as sentiment soured last week. Despite prices’ inability to break loose of recent ranges, that suggests that the Dollar’s influence outpaced that of bond yields (if only slightly). This might translate into modest gains if the greenback corrects lower as risk aversion moderates after Turkey’s central bank offered markets an emergency liquidity boost.

GOLD TECHNICAL ANALYSIS

Gold prices are stuck in a narrow range but a bullish Piercing Line candlestick pattern coupled with RSI divergence hints a bounce may be ahead. A push above support-turned-resistance at 1221.25 opens the door for a retest of the 1236.6-40.86 area. Immediate support is at 1204.59, the August 3 low.